We consider a model in which banks face two moral hazard problems: 1) asset substitution by shareholders, which can occur when banks make socially-inefficient, risky loans; and 2) managerial under-provision of effort in loan monitoring. The privately-optimal level of bank leverage is neither too low nor too high: It efficiently balances the market discipline that owners of risky debt impose on ...

Multinational firms circumvent capital controls by distorting their reported trade patterns, profitability, and dividend repatriations. The changed patterns of reported profits in response to capital controls are comparable to the effects of a 24% difference in corporate tax rates. The costliness of these acts of evasion combined with the significantly higher interest rates faced by multination...

How important are differences in owner personal characteristics (risk tolerance or optimism) versus the environment in which a firm operates (bankruptcy institutions or access to credit) for firm financial structure, size, owner net-worth and welfare? To answer this question we construct a dynamic, computable model with heterogeneous agents and endogenous default in which entrepreneurs weigh th...

This study analyzes the interaction of agency problems in public policy and of agency problems inside the firm: it investigates the case of a large privatized firm subject to many policy constraints. The last steps of Telefonica’s privatization were designed to promote a dispersed ownership and give managers a high level of discretion in running the company. This effectively created an agency p...

This paper analyses the effect of the capital structure of lenders on the capital structure of their borrowers. We provide new evidence on the capital structure determinants of non-financial firms and contribute to the discussion on the effect of the financial sector on the real economy. Using syndicated loan contracts, we identify the most important lenders for each borrower and construct a pr...

Firms’ financial data vary considerably with the size of their operations. Such scale differences potentially confound several types of inferences, of which this paper analyzes three. This paper evaluates two potential solutions to these inference problems suggested by theory: (i) deflating the data by a proxy for scale; and (ii) including a scale proxy as an independent variable. First, simula...

We define annual shareholder meetings as contentious if a significant fraction of shareholders are expected to vote against management’s recommendation on one or more of the items on the ballot, a signal that shareholders are increasing their monitoring activity. Using a sample of almost 28,000 meetings between 2003 and 2012, we examine stock returns over the period between the proxy filing and...

OBJECTIVE Rheumatoid Arthritis (RA) is an autoimmune and chronic inflammatory disease of unknown etiology. Killer cell immunoglobulin-like receptors are expressed on the surface of natural killer cells and CD28null T-cells, both present in synovial membrane of RA. Therefore we evaluated the associations of KIR genes with RA. METHODS 16 KIR genes were genotyped in 100 healthy subjects (HS) and...

In this paper, we examine the effect of voluntary adoption of clawback provision on non-GAAP earnings disclosures. The extant literature documents that the voluntary adoption of clawback provisions improves financial reporting quality by increasing the costs of misstating GAAP earnings. However, managers may respond to perception of reduced discretion over GAAP reporting by increasing their rel...

This paper analyzes how corporate capital gains taxes affect the capital gain realization decisions of firms. The paper outlines the tax treatment of corporate capital gains, the consequent incentives for firms with gains and losses, the efficiency consequences of these taxes in the context of other taxes and capital market distortions, and the response of firms to these incentives. Despite rec...